Download - Photo Developing and Printing (Digital)

Pre-Feasibility Study

PHOTO DEVELOPING AND PRINTING LAB(Digital Technology)

Small and Medium Enterprise Development AuthorityGovernment of Pakistan

www.smeda.org.pk

HEAD OFFICE

6th Floor LDA Plaza Egerton Road, LahoreTel: 111-111-456, Fax:6304926-7 Website: www.smed.org.pk.

[email protected]

REGIONAL OFFICE PUNJAB

REGIONAL OFFICE SINDH

REGIONAL OFFICE NWFP

REGIONAL OFFICE BALOCHISTAN

8th Floor LDA Plaza Egerton Road, Lahore

Tel: 111-111-456, Fax:6304926-7 Website:

[email protected]

5TH Floor, BahriaComplex II, M.T. Khan Road,

Karachi.Tel: (021) 111-111-456

Fax: (021) [email protected]

Ground FloorState Life Building

The Mall, Peshawar.Tel: (091) 9213046-47


Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.Tel: (081) 831623, 831702


March, 2009

Pre-Feasibility Study Photo Developing and Printing Lab (Digital Technology)

PREF-74/March, 2009/Rev 2

1

DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject

matter and provide a general idea and information on the said area. All the material

included in this document is based on data/information gathered from various sources and

is based on certain assumptions. Although, due care and diligence has been taken to

compile this document, the contained information may vary due to any change in any of

the concerned factors, and the actual results may differ substantially from the presented

information. SMEDA does not assume any liability for any financial or other loss

resulting from this memorandum in consequence of undertaking this activity. The

prospective user of this memorandum is encouraged to carry out additional diligence and

gather any information he/she feels necessary for making an informed decision.

For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk

DOCUMENT CONTROL

Document No. PREF-74

Prepared by SMEDA-Punjab

Approved by Provincial Chief Punjab

Issue Date March, 2009

Issued by Library Officer



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TABLE OF CONTENTS

1 INTRODUCTION TO SMEDA.................................................................................................... 4

2 PURPOSE OF THE DOCUMENT............................................................................................... 4

3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT..................... 4

4 PROJECT PROFILE.................................................................................................................... 5

4.1 OPPORTUNITY RATIONALE ...................................................................................................... 54.2 PROJECT BRIEF ....................................................................................................................... 64.3 MARKET ENTRY TIMING ......................................................................................................... 64.4 PROPOSED BUSINESS LEGAL STATUS ....................................................................................... 64.5 PROJECT CAPACITY AND RATIONALE....................................................................................... 64.6 PROJECT INVESTMENT............................................................................................................. 64.7 PROPOSED LOCATION.............................................................................................................. 74.8 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS............................................................ 74.9 STRATEGIC RECOMMENDATIONS ............................................................................................. 7

5 SECTOR & INDUSTRY ANALYSIS........................................................................................... 9

5.1 GLOBAL PROSPECTIVE ............................................................................................................ 95.2 IMPORTS OF PHOTOGRAPHIC GOODS IN PAKISTAN:.................................................................. 105.3 LOCAL PROSPECTIVE ............................................................................................................ 115.4 LEGAL ISSUES REGARDING INDUSTRY ................................................................................... 12

6 MARKET INFORMATION ....................................................................................................... 13

6.1 MARKET POTENTIAL ............................................................................................................. 136.2 TARGET CUSTOMERS ............................................................................................................ 13

7 PRODUCTION PROCESS......................................................................................................... 14

7.1 PRODUCTION PROCESS FLOW ................................................................................................ 147.2 PRODUCT MIX OFFERED........................................................................................................ 157.3 RAW MATERIAL REQUIREMENT............................................................................................. 167.4 TECHNOLOGY AND PROCESSES .............................................................................................. 177.5 MACHINERY REQUIREMENT .................................................................................................. 187.6 MACHINE MAINTENANCE...................................................................................................... 18

8 LAND & BUILDING REQUIREMENT .................................................................................... 18

8.1 LAND REQUIREMENT ............................................................................................................ 188.2 COVERED AREA REQUIREMENT ............................................................................................. 198.3 CONSTRUCTION COST ........................................................................................................... 198.4 RENT COST ........................................................................................................................... 198.5 UTILITIES REQUIREMENT ...................................................................................................... 19

9 HUMAN RESOURCE REQUIREMENT................................................................................... 19

10 FINANCIAL ANALYSIS............................................................................................................ 20

10.1 PROJECTED INCOME STATEMENT........................................................................................... 2010.2 REVENUES ............................................................................................................................ 2110.3 DIRECT COST........................................................................................................................ 2110.4 OPERATING EXPENSES .......................................................................................................... 2210.5 PROJECTED BALANCE SHEET ................................................................................................. 23



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10.6 PROJECTED CASH FLOW STATEMENT..................................................................................... 24

11 KEY ASSUMPTIONS................................................................................................................. 26

11.1 MACHINERY ASSUMPTIONS ................................................................................................... 2611.2 OPERATING ASSUMPTIONS .................................................................................................... 2611.3 ECONOMY RELATED ASSUMPTIONS ....................................................................................... 2611.4 CASH FLOW ASSUMPTIONS.................................................................................................... 2611.5 FINANCIALS ASSUMPTIONS ................................................................................................... 2611.6 OPERATING COST ASSUMPTIONS ........................................................................................... 2711.7 DIRECT COST ASSUMPTIONS ................................................................................................. 2711.8 REVENUE ASSUMPTIONS ....................................................................................................... 27



4

11 IINNTTRROODDUUCCTTIIOONN TTOO SSMMEEDDAA

Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME support program.

Since its inception in October 1998, SMEDA had adopted a sectoral SME development approach. A few priority sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved recommending changes in regulatory environment by taking into consideration other important aspects including finance, marketing, technology and human resource development.

SMEDA has so far successfully formulated strategies for sectors including fruits and vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical instruments, transport and dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.

22 PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTT

This particular pre-feasibility is regarding business of photo developing and printing, which comes under service sector. The objective of the pre-feasibility is primarily to provide potential entrepreneurs information on various aspects of the project including industry analysis, technical requirements, marketing, labor requirements and financial analysis.

33 CCRRUUCCIIAALL FFAACCTTOORRSS && SSTTEEPPSS IINN DDEECCIISSIIOONN MMAAKKIINNGG FFOORR IINNVVEESSTTMMEENNTT

A SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. Strengths and weaknesses are internal where as opportunities and threats originate from the external envoirnement. Following are major strengths, weaknesses, opportunities and threats of photo developing and printing business in Pakistan.

3.1 Strengths Digital technology has Information-intensive applications. It provides quick turnaround. Easy availibility of resources (technological, skilled human resource, raw

material, infrastructure etc.) Availibility of low cost and user friendly cameras. Affordable development and printing of photographs. Fast developing and printing.



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3.2 Weakness With increase in use of digital cameras, consumers can now view theirs photos on

PC by directly attaching their digital cameras with a computer. Machinery cost of a digital lab is much higher as compared to conventional labs. It is difficult to implement. Due to world recession, raw material prices has increased.

3.3 Opportunity New applications keep on coming due to innovation in technology. In future, digital cameras and their accessories can be placed in shop for selling

purpose. Great potential, since there are not many (very few) digital photo development

labs operating in Pakistan. Growing trend of photography in Pakistan.

3.4 Threat Cost inhibits growth, so huge amount of money required for adaptation of new

technology. Potential users may be unconvinced by advantages.

44 PPRROOJJEECCTT PPRROOFFIILLEE

"Photography" is derived from the Greek words photos ("light") and graphein ("to draw") The word was first used by the scientist Sir John F.W. Herschel in 1839. It is a method of recording images by the action of light, or related radiation, on a sensitive material.

After introduction of user-friendly and affordable digital cameras, digital photography has become a popular phenomenon, world-wide. This pre-feasibility will facilitate to understand the newly emerging business of digital photo developing labs. In addition to the conventional services of developing and printing of negative rolls, this technology is enabling us to process photos from slides and digital media.

44..11 OOppppoorrttuunniittyy RRaattiioonnaallee

Photography has emerged itself as a basic need of the day. Camera is being used more or less in every house in Pakistan and world over. It is the cheapest medium to save the moments of life. It is also the need/requirement of many big industries, like film, newspapers, advertising and fashion. Many experts see digital photo printing as the next wave in printing technology. The same consumer, who probably one or two years ago did not feel any need for digital printing is now far more interested. As a result there has been a tremendous increase in photo developing labs with digital technology in last few years.



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44..22 PPrroojjeecctt BBrriieeff

The photo printing and developing business comes under service sector and it provides variety of services like developing, printing, enlarging, framing, mounting of photographs and sale of cameras & photo accessories (i.e. flashes, film rolls, albums, camera batteries, camera bags etc.). Moreover a studio will also be established along with the shop and lab, where clients can have there snaps exposed.

44..33 MMaarrkkeett EEnnttrryy TTiimmiinngg

Demand for the digital labs is increasing at a rapid pace and there are very few currently operating in Pakistan. Therefore, it is advisable to enter this business at earliest. Moreover, photo labs can be established at any time of the year, all seasons are suitable for market entry but for more fast business earning it would be advisable to start business in wedding season.

44..44 PPrrooppoosseedd BBuussiinneessss LLeeggaall SSttaattuuss

An enterprise can be a proprietorship or a partnership and even it can be registered under company law with Security and Exchange Commission of Pakistan. Selection totally depends upon the choice of the entrepreneur. Legal status recommended for this business type is sole proprietorship/partnership, as registering sole ownership requires less legal requirement. Similarly a lower income tax rate is applicable to sole proprietorship than that of any other form of companies.

44..55 PPrroojjeecctt CCaappaacciittyy aanndd RRaattiioonnaallee

The proposed digital lab has capacity to print 1180 prints (4”x 6”) in one hour. Although shop will operate for eleven hours daily but the lab will only operate for eights hours (single shift) a day.

44..66 PPrroojjeecctt IInnvveessttmmeenntt

Follow is the breakup of investment required for the project:

TTaabbllee 44--11:: IInnvveessttmmeenntt bbrreeaakkuupp

Sr.# Description Rupees1. Capital cost 9,917,5002. Working Capital 1,260,124

Total 11,177,624

TTaabbllee 44--22:: RReeccoommmmeennddeedd PPrroojjeecctt PPaarraammeetteerrss

Capacity Human Resource

Technology/Machinery Location

1180 prints (4”x 6”)/hour 9 Imported Machinery Metropolitan Financial Summary

Project Cost IRR NPV Payback Period11.17M 40.38% 10.6M 2.80 Years



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44..77 PPrrooppoosseedd LLooccaattiioonn

Location of unit is primary concern in this business. It should ideally be located near residential blocks of metropolitans, where majority population belongs to middle and/or higher income bracket. Other suitable location can be concentrated markets for photo labs and related arcades (e.g. Nisbat Road and Chamberlain Road in Lahore).

44..88 KKeeyy SSuucccceessss FFaaccttoorrss//PPrraaccttiiccaall TTiippss ffoorr SSuucccceessss

Customer care, well in time service and maintaining good quality can ensure success of any business. Photo developing and printing is service based business where combination of good quality of product and exclusive service can play distinctive role in ultimate success of the business. Entrepreneur can be innovative in many ways to facilitate clients. Giving customer best value for his money is primary success factor for photo developing business.

Photo-image processing is the most critical step in photography. The final images, or prints, that determine whether consumers continue to spend their discretionary income on photography are a direct result of the quality of photo/image processing. Regardless of the camera, film processing equipment, processing chemicals and photographic paper used." Photo-image processing will be the most critical step in keeping clients coming back.

44..99 SSttrraatteeggiicc RReeccoommmmeennddaattiioonnss

44..99..11 MMaarrkkeettiinngg

Regular and sustained marketing is required for a successful business of photo developing and printing. Few useful marketing and promotional tips are as under: Referral marketing is most suitable medium for promoting service sector businesses

including photo developing and printing. Take care of your customers and they will promote your business through word of mouth.

Know your customers’ needs and design your product and services in accordance with their requirements.

Provide “in time” service to customers. Timely delivery is a major consideration for the clients.

Use promotional sales to increase traffic flow. This technique is useful to gain competitive edge over others.

Local marketing channels like cable network advertisements and leaflets distribution can be used to increase traffic flow.

44..99..22 PPrriicciinngg

Following are the currently market prices charged for services being offered by photo printing and developing labs:



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TTaabbllee 44--33:: DDeevveellooppiinngg

Sr. # Media Type Service charges per roll1 Film roll Rs. 20

TTaabbllee 44--44:: SSccaannnniinngg aanndd IImmaaggee RReeccoorrddiinngg

Sr. # Media Type Service charges per roll1 CD writing from negative Rs. 150

TTaabbllee 44--55:: PPrriinnttiinngg

Sr. # Print Service charges per print (Rs.)

1 Prints 4R (4”X6”) 82 Prints 5R (5”X7”) 103 Prints 6R (6”X8”) 404 Prints 8R (8”X10”) 805 Prints (8”X12”) 906 Prints 10R (10”X12”) 1007 Prints (10”X15”) 1206 Prints (12”X16”) 2007 Prints (12”X18”) 2258 Prints (12”X36”) 400

44..99..33 PPrroodduucctt PPaacckkaaggiinngg

Traditionally, negatives are placed in a plastic sheet (specifically made for the purpose) and presented to the client along with an album and the photographs in a printed envelop. Album, negative wallet and envelope are complimentary and client is not charged for them. Following are the current market prices at which lab will purchase above mentioned packing material:

TTaabbllee 44--66:: MMaarrkkeett PPrriicceess ooff PPaacckkiinngg MMaatteerriiaall

Sr. # Item Purchase price per unit(Rs.)

1 Album 4.802 Negative wallet 1.03 Envelope 1.5

Total 7.3



9

55 SSEECCTTOORR && IINNDDUUSSTTRRYY AANNAALLYYSSIISS

55..11 GGlloobbaall PPrroossppeeccttiivvee

In this new era where the time is running fast, the Global market is also showing fast developing trends. People have turned from conventional methods to digital technology for better and faster results.

Market demand has lead to stronger digital intentions as the conventional methods are inflexible and produce static prints. Digital equipment increases the opportunity to expand services for all sizes of photo-finishing laboratories because it can process and print film and scan the images onto computer CDs or for use online. This trend increases the importance of connectivity between the imaging industry and the information technology industry.

Based on InfoTrends report1, it is revealed that; Worldwide revenue from low end (sub-$1,000) digital camera sales is forecast to

reach $11.8 billion in 2007. Worldwide unit shipments of low end digital cameras will reach 24 million units

in 2002, capturing 28% of total worldwide camera sales (not including one-time use cameras).

Unit volume is forecast to grow at a compound annual growth rate of 16% to reach 51 million units in 2007.

Digital camera sales are expected to experience a compounded annual growth rate of 15 percent over the next four years, reaching 82 million units by 2008.

Based on IDC report2, it is revealed that; Between 2005 and 2009, digital prints are expected to grow 26% annually, from

60 billion to 152 billion. And by 2009, digital print revenue could grow to $107 billion (it's about $38 billion currently). Best of all, atleast from the industry's point of view, more than 55% of those prints will be created at a retail location.3

Positive growth is expected in the consumer photofinishing market. Even though film usage will decline, the bright future of digital camera shipments will increase the number of images captured, shared and received.

Digital camera images captured, shared and received worldwide will grow an average of 35% for 2003-2008.

Digital cameras will continue to be the largest generator of digital images despite the greater forecasted proliferation of camera phones.

Prints from digital images will surpass film prints in 2006 and will account for 71% of total worldwide prints by 2008.

1 www.infotrends.com/Revenue from Worldwide Digital Camera Sales to Reach $11_8 Billion in 2007.htm2 www.IDC.com/Bright Future of Digital Cameras to Boost Consumer Photofinishing Market, IDC Expects3 Photo Industry Sees Future In Printing/technology analysis firm IDC Research,2005-2009



10

55..22 IImmppoorrttss ooff pphhoottooggrraapphhiicc ggooooddss iinn PPaakkiissttaann44::

Following are the major imports of photographic goods done in Pakistan. The data will give a fair idea of the prospects of this industry in Pakistan:

YEARSCOMMODITY

CODECOMMODITY

TRADE (USD)

WEIGHT (KG)

QUANTITY NAME QUANTITY

370231 Colour photo film,rolls width < 105mm 1,610,099 45,999 Number of items 1,460,301

370310Unexposed photographic paper, textile roll > 610mm wid 2,040,885 329,391 weight in kilograms 329,391

370320Unexposed colour photographic paper, board or textile 5,964,209 791,595 weight in kilograms 791,595

370790Chemicals preparation for photographic uses,nes 4,579,290 1,165,699 weight in kilograms 1,165,699

370231 Colour photo film,rolls width < 105mm 793,125 0 Number of items 65,604

370310Unexposed photographic paper, textile roll > 610mm wid 1,540,592 0 Number of items 97,308

370320Unexposed colour photographic paper, board or textile 4,550,002 0 Number of items 289,778


370231 Colour photo film,rolls width < 105mm 402,739 15,203 Number of items 376,356

370310Unexposed photographic paper, textile roll > 610mm wid 823,041 170,579 Weight in kilograms 170,579

370320Unexposed colour photographic paper, board or textile 3,609,595 494,872 Weight in kilograms 494,872



370310Unexposed photographic paper, textile roll > 610mm wid 1,051,770 163,127 Weight in kilograms 163,127




370310Unexposed photographic paper, textile roll > 610mm wid 579,245 109,347 Weight in kilograms 109,347


370790Chemicals preparation for photographic uses,nes 3,653,187 1,030,519 Weight in kilograms 1,030,519

2007

2003

2004

2005

2006

4 www.comtrade.un.org



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55..33 LLooccaall PPrroossppeeccttiivvee

Photo printing business is emerging as one of the good business ventures in Pakistan. Pakistan is one of those countries where use of camera is gaining popularity, as it is the cheapest medium to save the moments of life.

Unfortunately neither is there any data available about the exact number of minilabs operating in Pakistan nor about their contribution to GDP. There are total 3505 minilabs working in Pakistan (140 Fuji, 160 Konica, 30 Kodak, 20thers). Number of small photo studios exists mostly in unorganized sector which do not have minilab facility. There is an association of this industry operating under name of Pakistan Photofinishers Association. The head office is in Peshawar and Lahore zone office is located at 86 Chamberlain Road, Lahore. The cluster of this business in Lahore is at Chamberlain Road and Nisbat Road. According to an estimate there are around 150 minilabs in Lahore. Major players are:

Konica (source LED)

Fuji (source Laser)

55..33..11 MMaajjoorr IInndduussttrryy PPllaayyeerrss ooff LLaahhoorree && ssuurrrroouunnddiinngg aarreeaass

Following is the list of major players in the market of Lahore:

TTaabbllee 55--11:: MMaajjoorr IInndduussttrryy PPllaayyeerrss

Sr # Name Location

1 Imperial Digital Color Lab Chamberlain Road ,Lahore 2 Ikram Digital Color Lab Chamberlain Road, Lahore

3 Konica Express Liberty Gulberg, Lahore4 Amfahas Liberty, Lahore

5 AB Digital Chamberlain Road, Lahore6 Insta Digital Color Lab Garhishahu, Lahore7 Crown Digital Color Lab Shiekhupura8 Master Rana Color Lab Kasur

5 Fuji, Head Office, Karachi



12

55..44 LLeeggaall IIssssuueess RReeggaarrddiinngg IInndduussttrryy

Photo printing business like any other business activity must be registered with income tax department and sales tax department. Prevailing rate of income tax for sole proprietorship is in various slabs max 25%. Rates are as follows:

TTaabbllee 55--22:: IInnccoommee TTaaxx BBrraacckkeettss

S/No Taxable income Rate of tax1 Where taxable income does not exceed Rs.

100,0000%

2 Where taxable income exceeds Rs. 100,000 but does not exceed Rs. 110,000

0.50%


1.00%


2.00%


3.00%


4.00%


5.00%


7.50%


10.00%


12.50%


15.00%

12 Where taxable income exceeds Rs. 800,000 but does not exceed Rs. 10,00,000

17.50%

13 Where taxable income exceeds Rs. 10,00,000 but does not exceed Rs. 13,00,000

21.00%

14 Where taxable income exceeds Rs. 13,00,000 25.00%

Note: No tax shall be charged if the income of a woman taxpayer does not exceed Rs. 125,000 Where the taxable income, in a tax year, of a taxpayer aged 60 years or more on the first day of that tax year does not exceed 500,000 rupees, his tax liability on such income shall be reduced by 50%.



13

66 MMAARRKKEETT IINNFFOORRMMAATTIIOONN

66..11 MMaarrkkeett PPootteennttiiaall

The market for photo developing and printing industry in Pakistan has been developing steadily over the years and a mushroom growth of minilabs has been observed in all the cities. Still a good potential is available for new labs, as population of big cities and use of digital camera are increasing day by day. Moreover there are very few digital photo processing labs operating in Pakistan, while their demand is rapidly raising

66..22 TTaarrggeett CCuussttoommeerrss

The customer of this industry can be categorized as follows: Retail customers Small photo studio owners not having minilabs News papers Professional photographers Surveyors etc



14

77 PPRROODDUUCCTTIIOONN PPRROOCCEESSSS

77..11 PPrroodduuccttiioonn PPrroocceessss FFllooww

Negative film roll

Chemical process for developing

negatives

Negative

Scanning

Scanning

Digital photos Slides

Saving images on computer

Printing photographs

Photographs are saved on CDs and presented to clients along with prints



15

77..11..11 IInnppuutt pphhoottoo ffiillmm

a. Film is accepted from customerb. Film passes through processor containing chemical baths. c. The negative is produced.d. Negative image is transferred to photographic papere. Photographic paper passes through a series of chemical baths.f. Photographic prints are produced.g. Prints and negatives are assembled into final packageh. Prints may be stored on any digital medium like CD, ZIP, FLOPPY etc i. Finished product is delivered to customer.

77..11..22 IInnppuutt ddiiggiittaall iimmaaggee

a. Digital media like digital camera, CD etc is accepted from customerb. Digital image saved and forwarded to equipment. c. Digital image is transferred to photographic paperd. Photographic paper passes through a series of chemical baths.e. Photographic prints are produced.f. Prints are assembled into final packageg. Finished product is delivered to customer.

77..11..33 IInnppuutt SSlliiddeess

a. Slide positive is accepted from customerb. Scanning of image from slidec. Digital image saved and forwarded to equipment. d. Digital image is transferred to photographic papere. Photographic paper travels through a series of chemical baths.f. Photographic prints are produced.g. Prints are assembled into final packageh. Digital image can also be stored on digital device like CD, ZIP or Floppy on

clients request.i. Finished product is delivered to customer.

77..22 PPrroodduucctt MMiixx OOffffeerreedd

The Photo developing and printing unit will offer following broad categories of products and services to its customers:

Photo developing and printing (digital input and film input) Photo enlargement (maximum 30”X 40”) Sale of film rolls, albums, cameras, batteries and allied accessories Exposing Photos Framing and mounting High resolution scanning service CD writing of photos Digital processing and customizing photographs



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77..33 RRaaww MMaatteerriiaall RReeqquuiirreemmeenntt

The raw materials required for minilabs are:

77..33..11..11 PPhhoottooggrraapphhiicc ppaappeerr

Photographic paper rolls are available in various sizes (length and width), most commonly used is of 610 feet x 6 inches and costs approximately Rs.4,600/-. This paper is sufficient to print 1830 prints or 51 rolls of 4”x6” size. Rates of various sizes of photographic papers are as follows:

TTaabbllee 77--11:: PPrriicceess ooff PPhhoottooggrraapphhiicc PPaappeerr

Sr. # Paper roll For print sizes Cost per roll1 610 ft (6”) 4”X6” Rs. 4,6002 610 ft (5”) 5”X7” Rs. 4,1003 575 ft (6”) 6”X8” Rs. 4,6004 275 ft (8”) 8”X10”, 8”X12” Rs. 3,7005 275 ft (10”) 10”X12”, 10”X15” Rs. 4,600

77..33..11..22 CChheemmiiccaallss

There are two main types of chemicals used in the process, developing chemicals and printing chemicals. Chemicals required at developing stage are film developer, film bleach, film fixer, and film stabilizer and at printing stage are paper developer, paper bleach, and paper stabilizer.

TTaabbllee 77--22:: PPrriicceess ooff CChheemmiiccaallss aavvaaiillaabbllee aatt FFUUJJII

Sr. # Type Quantity Cost per container1 Developer Kit CP-47L, CP-43 2.5 liters Rs. 7332 CP 49E, PCx2 - Rs.3,3753 Bleach P-2R 4 liters Rs. 1,561

It is difficult to calculate the consumption of these chemicals in quantitative terms. According to experts, average cost of chemicals consumed for printing and developing of a film roll of 36 snaps is as follow:

TTaabbllee 77--33:: CCoosstt ooff CChheemmiiccaallss ((AApppprrooxxiimmaattee))

Sr. # Type Cost per roll1 Chemicals at developing Rs. 252 Chemicals at printing Rs. 10

Total Rs. 35

The chemical process generates silver as waste. This wastage is sold at the rate of Rs. 25 to 35 per liter, depending upon the silver proportion in it. For the purpose of this feasibility wastage sale has been ignored in financials.



17

These raw materials are easily available in all the cities of Pakistan. Following are the major suppliers of machinery and raw material in Lahore and Karachi:

TTaabbllee 77--44:: SSuupppplliieerrss ooff MMaacchhiinneerryy aanndd RRaaww MMaatteerriiaall

Sr. # Company Name Contacts1 FUJI FILM PAKISTAN 37D PECHS Karachi

Tel: 021-4535502.West Pakistan Investment Ltd Building Patiala Ground LahoreTel: 042-7237704-6

3 EM-AEY ENTERPRISES (DNP)

Patiala Ground, Lahore

4 KODAK Bahria Complex M.T Khan Road, KarachiTel: 021-5610150Empress Road, Lahore

5 PPM CHEMICALS (PVT) LTD 1/1 Mission Road, LahoreTel: 042-7223693

6 UNICOLOR 42-Chamberlain Road, Lahore Tel: 042-7226361

77..44 TTeecchhnnoollooggyy aanndd PPrroocceesssseess

77..44..11 TTeecchhnnoollooggyy//PPrroocceessss OOppttiioonnss

Two main types of technologies are available these days: Conventional minilabs Digital minilabs

77..44..22 MMeerriittss && ddeemmeerriittss ooff tthheessee tteecchhnnoollooggiieess

Conventional minilabs only take photo prints from film rolls, while digital minilabsallows photos to be produced on photo paper using digital technologies. Pictures can be manipulated in many ways before it is printed. Digital lab can print images from CDs, digital cameras, slide film and negative films. Besides printing, an image can also be copied to CDs and Floppy disks on customer’s demand.

Digital minilabs are costly as compared to conventional minilabs. Digital technology was introduced in 1998. In Pakistan this technology arrived in year 2001. Digital minilabs with good market repute are Fuji 355, Konica R-1 Super, Kodak Noritsu 2901, Kodak Noritsu 3001, Fuji LP 7100 and Fuji LP 7500. These machines cost in range of Rs. 4.00 million to Rs. 9.00 million and have production capacity between 1,000 and 1,200 prints per hour.Traditionally, the rates charged for digital prints are higher than that of conventional prints. Labs with digital technology are charging Rs. 8 for 4”x6” print as compared to Rs. 6 of conventional labs. Clients are willing to pay this extra premium for better quality prints of digital labs.



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77..55 MMaacchhiinneerryy RReeqquuiirreemmeenntt

Machine and equipment required for a digital photo developing and printing lab are listed as follow:

TTaabbllee 77--55:: MMaacchhiinnee aanndd EEqquuiippmmeenntt

Sr. #

Description No. ofUnits

Cost per unit

Total cost Availability

1. Minilab Fuji Frontier LP7500

1 7,500,000 7,500,000 Local

2. Film processor FP 560 B 1 1,000,000 1,000,000 Local3. Exposing studio equipment

(Professional Camera, lights, backgrounds, stands etc)

1 90,000 90,000 Local

4. Split AC 2 35,000 70,000 Local5. Furniture/fixtures/glass work 265,000 265,000 Local6. Computer 1 35,000 35,000 Local7. Scanner 1 7,500 7,500 Local

8. Printer 1 15,000 15,000 Local

9. Generator 1 780,000 780,000 Local

Total 9,762,500

Major supplier of machinery used in processing and developing of photographs are listed under the caption “suppliers of machinery and raw material”

77..66 MMaacchhiinnee MMaaiinntteennaannccee

Generally these machines require less but regular maintenance and cleanliness. Spare parts and after sale service is easily available in all the big cities. For this pre feasibility, the machine maintenance cost is assumed at 1% of machine cost.

88 LLAANNDD && BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTT

88..11 LLaanndd RReeqquuiirreemmeenntt

The proposed photo developing and printing unit requires an area of approximately 640sq ft. It is recommended to start this business at rented premises rather at owned premises.



19

88..22 CCoovveerreedd AArreeaa RReeqquuiirreemmeenntt

Following table gives detail of covered area requirementas for the lab:

TTaabbllee 88--11:: LLaabb aarreeaa rreeqquuiirreemmeennttss

Sr. # Description Sq ft. Units Area Sq ft1 Lab 126 1 1262 Studio 300 1 3003 Sales/customer area 120 1 1204 Owner room 94 1 94

Total 640

88..33 CCoonnssttrruuccttiioonn CCoosstt

It is assumed that the renovation cost would be approximately Rs. 400 per sq ft. Total renovation cost of 640-sqft area will be Rs. 265,000/-

88..44 RReenntt CCoosstt

Building will be acquired on rent, will cost around Rs. 35,000 per month in recommended areas of Lahore. For the purpose of this feasibility it is assumed that a premise is rented on same.

88..55 UUttiilliittiieess RReeqquuiirreemmeenntt

The necessary utilities are electricity and telephone. A three-phase commercial electricity connection is required. Current rate of electricity for these connections is Rs 11.00 per kilowatt-hour.

99 HHUUMMAANN RREESSOOUURRCCEE RREEQQUUIIRREEMMEENNTT

Skilled machine men are easily available at competitive salaries. Number of workers required for each department along with their salaries are given below:

TTaabbllee 99--11:: HHuummaann RReessoouurrccee DDeessccrriippttiioonn

Sr. #

Positions No. of employees

Salary/month (Rs.)

Annual salary

1 Manager 1 25000 300,0002 Machine men 1 15,000 180,0003 Assistant operator 1 10,000 120,0004 Cashier/Accountant 1 8,000 96,0005 Helper 1 6,000 72,0006 Graphic designer 1 10,000 120,0007 Computer operator 1 8,000 96,0008 Security guard 2 8,000 192000

Total 9 98,000 1,176,000

Pre-Feasibility Study Photo Developing and Printing Lab


20

1100 FFIINNAANNCCIIAALL AANNAALLYYSSIISS

1100..11 PPrroojjeecctteedd IInnccoommee SSttaatteemmeenntt

Rupees(000)

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

Revenue* 14,925 23,507 24,683 25,917 27,213 28,573 30,002 31,502 33,077 34,731 Direct cost* 7,398 11,906 12,520 13,168 13,850 14,569 15,326 16,124 16,965 17,852

Gross Profit 7,527 11,602 12,162 12,749 13,363 14,005 14,676 15,378 16,112 16,879

Operating Expenses: 4,243 4,516 4,753 5,030 5,349 5,691 6,101 6,562 7,077 7,650

Operating Profit 3,284 7,086 7,409 7,719 8,013 8,313 8,575 8,816 9,035 9,228

Financial Charges 956 754 553 352 151 - - - - -

Profit before Taxation 2,329 6,332 6,856 7,367 7,863 8,313 8,575 8,816 9,035 9,228 Taxation 582 1,583 1,714 1,842 1,966 2,078 2,144 2,204 2,259 2,307

Profit after Taxation 1,747 4,749 5,142 5,525 5,897 6,235 6,431 6,612 6,776 6,921

Acc. Profit b/f - 1,747 6,495 11,637 17,162 23,059 29,294 35,725 42,337 49,113

Un-appropriated Profit c/f 1,747 6,495 11,637 17,162 23,059 29,294 35,725 42,337 49,113 56,034 * NOTE The figure of revenue and cost are exclusive of sales tax



21

1100..22 RReevveennuueessRevenue Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Revenue from printing and developing 9,691,733 15,264,480 16,027,704 16,829,089 17,670,544 18,554,071 19,481,774 20,455,863 21,478,656 22,552,589Revenue from enlargements 2,422,933 3,816,120 4,006,926 4,207,272 4,417,636 4,638,518 4,870,444 5,113,966 5,369,664 5,638,147 Revenue from film roll, cameras, batteries and other accessories 969,173 1,526,448 1,602,770 1,682,909 1,767,054 1,855,407 1,948,177 2,045,586 2,147,866 2,255,259 Revenue from Studio/exposing 969,173 1,526,448 1,602,770 1,682,909 1,767,054 1,855,407 1,948,177 2,045,586 2,147,866 2,255,259 Revenue from Albums/framing 484,587 763,224 801,385 841,454 883,527 927,704 974,089 1,022,793 1,073,933 1,127,629 Revenue from scanning, CD writing 387,669 610,579 641,108 673,164 706,822 742,163 779,271 818,235 859,146 902,104 total revenue 14,925,269 23,507,299 24,682,664 25,916,797 27,212,637 28,573,269 30,001,933 31,502,029 33,077,131 34,730,987

1100..33 DDiirreecctt CCoosstt

Direct cost Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Printing and developing 3,939,545 6,204,718 6,514,954 6,840,701 7,182,749 7,541,887 7,918,902 8,314,979 8,730,642 9,167,207 Packing cost 236,003 371,700 409,799 451,804 498,114 549,171 605,455 667,525 735,939 811,376 Enlargements 1,453,760 2,404,156 2,524,363 2,650,582 2,783,111 2,922,266 3,068,379 3,221,798 3,382,888 3,552,033

Film roll, cameras, batteries and other accessories 726,880 1,202,078 1,262,182 1,325,291 1,391,555 1,461,133 1,534,190 1,610,899 1,691,444 1,776,016 Studio/exposing 484,587 801,385 841,454 883,527 927,704 974,089 1,022,793 1,073,933 1,127,629 1,184,011 Albums/framing 363,440 601,039 631,091 662,645 695,778 730,567 767,095 805,450 845,722 888,008 Scanning, CD writing 193,835 320,554 336,582 353,411 371,081 389,635 409,117 429,573 451,052 473,604 Total direct cost 7,398,049 11,905,629 12,520,425 13,167,961 13,850,092 14,568,748 15,325,932 16,124,157 16,965,317 17,852,256



22

1100..44 OOppeerraattiinngg EExxppeennsseess


Administrative Salaries 1,176,000 1,293,600 1,422,960 1,565,256 1,721,782 1,893,960 2,083,356 2,291,691 2,520,860 2,772,946 Rent 600,000 660,000 726,000 798,600 878,460 966,306 1,062,937 1,169,230 1,286,153 1,414,769 legal & Audit Fee 25,000 27,500 30,250 33,275 36,603 40,263 44,289 48,718 53,590 58,949 Entertainment 74,626 117,536 123,413 129,584 136,063 142,866 150,010 157,510 165,386 173,655 Telephone, Fax and Postage 74,626 117,536 123,413 129,584 136,063 142,866 150,010 157,510 165,386 173,655 Electricity 744,360 818,796 900,676 990,743 1,089,817 1,198,799 1,318,679 1,450,547 1,595,602 1,755,162 Advertisement and promotional 298,505 235,073 246,827 259,168 272,126 285,733 300,019 315,020 330,771 347,310 Repair and maintenance 98,125 107,938 118,731 130,604 143,665 158,031 173,834 191,218 210,340 231,374 Traveling conveyance 74,626 116,017 121,622 127,488 133,625 140,045 146,760 153,779 161,118 168,787 Printing and stationery 74,626 117,536 123,413 129,584 136,063 142,866 150,010 157,510 165,386 173,655 Depreciation 981,250 883,125 794,813 715,331 643,798 579,418 521,476 469,329 422,396 380,156 Amortization 21,000 21,000 21,000 21,000 21,000 - - - - -

4,242,746 4,515,658 4,753,118 5,030,218 5,349,066 5,691,154 6,101,380 6,562,063 7,076,987 7,650,418



23

1100..55 PPrroojjeecctteedd BBaallaannccee SShheeeett

Rupees(ooo)

Year - 0 Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

Tangible Fixed Assets 9,813 8,831 7,948 7,153 6,438 5,794 5,215 4,693 4,224 3,802 3,421 Preoperational expenses 105 84 63 42 21 - - - - - -

Current Assets:Security deposit 300 300 300 300 300 300 300 300 300 300 300 Advance rent 300 - - - - - - - - - - Cash in Hand / Bank 660 3,331 8,317 13,218 18,426 23,939 30,825 37,853 45,014 52,297 59,687

1,260 3,631 8,617 13,518 18,726 24,239 31,125 38,153 45,314 52,597 59,987

11,178 12,546 16,628 20,713 25,185 30,033 36,340 42,846 49,538 56,398 63,408

Owners Equity:Capital 5,589 5,589 5,589 5,589 5,589 5,589 5,589 5,589 5,589 5,589 5,589 Accumulated Profit - 1,747 6,495 11,637 17,162 23,059 29,294 35,725 42,337 49,113 56,034

Long Term Loan 5,589 3,353 2,236 1,118 - - - - - - -

Current Liabilities:Current Portionof Long Term Loan - 1,118 1,118 1,118 1,118 - - - - - - Accounts Payable 740 1,191 1,252 1,317 1,385 1,457 1,533 1,612 1,697 1,785

- 1,858 2,308 2,370 2,435 1,385 1,457 1,533 1,612 1,697 1,785

11,178 12,546 16,628 20,713 25,185 30,033 36,340 42,846 49,538 56,398 63,408



24

1100..66 PPrroojjeecctteedd CCaasshh FFllooww SSttaatteemmeenntt

Rupees(ooo)

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Profit before Financial Charges & Taxation - 3,284 7,086 7,409 7,719 8,013 8,313 8,575 8,816 9,035 9,228Amortization 21 21 21 21 21 - - - - - Depreciation - 981 883 795 715 644 579 521 469 422 380

- 4,287 7,990 8,225 8,455 8,678 8,893 9,096 9,285 9,457 9,608Working Capital Change - 1,040 451 61 65 68 72 76 80 84 89

- 5,327 8,441 8,286 8,520 8,746 8,965 9,172 9,365 9,541 9,697 Cash form other SourcesOwners 5,589 - - - - - - - - - - Bank Finance 5,589 - - - - - - - - - -

11,178 - - - - - - - - - -

Total Sources 11,178 5,327 8,441 8,286 8,520 8,746 8,965 9,172 9,365 9,541 9,697

Applications:Fixed Assets 9,813 - - - - - - - - - - Preoperational Expenses 105 - Working Capital 1,260 - Re -Payment of Loan - 2,073 1,872 1,671 1,470 1,269 - - - - - Tax - 582 1,583 1,714 1,842 1,966 2,078 2,144 2,204 2,259 2,307

11,178 2,656 3,455 3,385 3,311 3,234 2,078 2,144 2,204 2,259 2,307

Cash Increase/(Decrease) - 2,671 4,986 4,901 5,208 5,512 6,886 7,028 7,161 7,283 7,390

Opening Balance 660 660 3,331 8,317 13,218 18,426 23,939 30,825 37,853 45,014 52,297

Closing Balance 660 3,331 8,317 13,218 18,426 23,939 30,825 37,853 45,014 52,297 59,687



25

1100..77 PPrroojjeecctt RRaattiioo AAnnaallyyssiissRupees

(ooo)


Income:Net sales/revenue 14,925 23,507 24,683 25,917 27,213 28,573 30,002 31,502 33,077 34,731 Profit before tax 2,329 6,332 6,856 7,367 7,863 8,313 8,575 8,816 9,035 9,228 Profit after tax 1,747 4,749 5,142 5,525 5,897 6,235 6,431 6,612 6,776 6,921 Retained earnings in business 1,747 6,495 11,637 17,162 23,059 29,294 35,725 42,337 49,113 56,034

Financial Position:Current assets 3,631 8,617 13,518 18,726 24,239 31,125 38,153 45,314 52,597 59,987 Less current liabilities (1,858) (2,308) (2,370) (2,435) (1,385) (1,457) (1,533) (1,612) (1,697) (1,785) Net working capital 1,773 6,308 11,148 16,292 22,854 29,668 36,620 43,702 50,900 58,202 Tangible Fixed assets net 8,831 7,948 7,153 6,438 5,794 5,215 4,693 4,224 3,802 3,421 Less long term debts other liabilities (3,353) (2,236) (1,118) - - - - - - -

Represented by:Equity 7,335 12,084 17,226 22,751 28,648 34,883 41,314 47,926 54,702 61,623

Ratios:Current assets to liabilities 1.95 3.73 5.70 7.69 17.50 21.36 24.89 28.10 31.00 33.60Profit before tax to sale/revenue (%) 15.6% 26.9% 27.8% 28.4% 28.9% 29.1% 28.6% 28.0% 27.3% 26.6%Return on fixed assets (%) 19.8% 59.7% 71.9% 85.8% 101.8% 119.6% 137.0% 156.5% 178.2% 202.3%Return on equity (%) 23.8% 39.3% 29.8% 24.3% 20.6% 17.9% 15.6% 13.8% 12.4% 11.2%Debt to equity:

Debt 31.4 15.6 6.1 - - - - - - - Equity 68.6 84.4 93.9 100.0 100.0 100.0 100.0 100.0 100.0 100.0

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0



26

1111 KKEEYY AASSSSUUMMPPTTIIOONNSS

1111..11 MMaacchhiinneerryy AAssssuummppttiioonnss

Capacity of minilab machine (Prints/Hour) 1,180Capacity per day -(impressions) approximately 8,000Repair and maintenance cost (% of equipment cost having growth 10%) 1%Number of prints per roll 36

1111..22 OOppeerraattiinngg AAssssuummppttiioonnss

Hours operational per day 8 hoursDays operational per month 25 daysDays operational per year 300 daysNo of shifts per day SingleAnnual capacity utilization for year 1 40%Annual capacity utilization for year 2 60%Annual growth in capacity utilization (year 3 onwards) 5% p.a.

1111..33 EEccoonnoommyy RReellaatteedd AAssssuummppttiioonnss

Electricity cost growth rate 10%Salary growth rate 10%Rent growth rate 10%Markup rate on long-term loan 16%Raw material price growth rate 5%Revenue price growth rate 5%

1111..44 CCaasshh FFllooww AAssssuummppttiioonnss

Accounts payable average 30 daysAdvance rent (period) 6 months

1111..55 FFiinnaanncciiaallss AAssssuummppttiioonnss

Project life (Years) 10Debt 50%Equity 50%Interest rate on long-term debt 18%Debt tenure (Years) 5Debt payments per year 2Discount rate (weighted Avg. cost of capital for NPV) 20%



27

1111..66 OOppeerraattiinngg CCoosstt AAssssuummppttiioonnss

Telephone Expenses (percentage of annual revenue) 0.5%Entertainment (percentage of annual revenue) 0.5%Amortization of deferred cost 20%Advertisement first year (percentage of annual revenue) 2%Advertisement year two and onwards (percentage of annual revenue) 1%Traveling and conveyance (percentage of annual revenue) 0.5%Printing and stationery (percentage of annual revenue) 0.5%

1111..77 DDiirreecctt CCoosstt AAssssuummppttiioonnss

Chemical used in negative development Rs.25/roll

Chemical used in printing Rs.10/roll

Printing paper Rs.90/roll

Packing charges Rs.7.5/roll

Enlargements (percentage of enlargement revenue) 60%

Film roll, cameras, batteries and other accessories (percentage of accessories revenue)

75%

Studio/exposing (percentage of studio/exposing revenue) 50%

Albums/framing (percentage of album/framing revenue) 75%

Scanning, CD writing (percentage of scanning and CD writing revenue) 50%

1111..88 RReevveennuuee AAssssuummppttiioonnss

Printing (4” x 6”) Rs.245/roll

Film roll (negative) developing Rs.20/roll

Revenue from enlargements (percentage of printing/developing revenue) 25%

Revenue from film roll, cameras, etc. (percentage of printing/developing revenue)

10%

Revenue from Studio/exposing (percentage of printing/developing revenue)

10%

Revenue from Albums/framing (percentage of printing/developing revenue)

5%

Revenue from scanning, CD writing (percentage of printing/developing revenue)

4%